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As US Airways Plans a Sixth Merger, Ed Colodny Recalls the First Four

Written by: Ted Reed12/24/12 - 6:05 AM EST

Tickers in this article:
AAMRQ.PK LCC UAL

CHARLOTTE, N.C. ( TheStreet) -- Ed Colodny knows mergers, particularly mergers involving US Airways (LCC) . As head of USAir from 1975 to 1991, he presided over four of them and considered a half dozen more.

"Putting together any merger is difficult," said Colodny, who is 86 years old and sharp as a tack, in an interview. "When you have large organizations like this, it's (hard) to try and figure out where the future is going to be."

US Airways today flies an Allegheny-themed A319.

"Mergers work best when one (carrier) is weak and one is strong and the weak one appreciates being bought up so they can all survive," he added. "Merging two strong airlines is inherently a culture clash, particularly at the top."

Nevertheless, Colodny said the impending merger between US Airways and American (AAMRQ.PK) will "probably be a great combination if it does occur -- just don't expect (a successful integration) to happen in six weeks or six months."

"American has a very proud heritage going back to its earliest days, and US Airways is equally proud if not more so," he said. "It had to come up the hard way because it did not start out as one of the chosen trunk airlines; it was a small regional carrier."

Colodny joined US Airways-predecessor Allegheny, previously called All American Airways, as its first staff attorney in 1957. The carrier had begun flying passengers in 1949. It was based at National Airport and had routes from Washington north to Buffalo and west to Pittsburgh.

Colodny was deeply involved in four mergers starting in 1967, when Allegheny merged with Indianapolis-based Lake Central Airlines. At the time, the Civil Aeronautics Board encouraged mergers to reduce subsidies. "Lake Central was the easiest, a friendly deal with few problems," he said. In 1971, Allegheny merged with Utica, N.Y. -based Mohawk Airlines. "Mohawk was in trouble and the banks forced it into a merger," he said. "It worked out fairly easily."

In 1987, USAir bought PSA. "That worked out easily too," Colodny said. "They wanted to do it. But from a cultural standpoint, there were differences, and when we took the smile off the PSA planes, there were screams up and down the West Coast."

During the 1980s, Colodny also engaged in merger discussions with Continental, Eastern, Northwest and United (UAL) . "We saw we had to bulk up or we would not go anywhere," he said. "We came close with Continental."

The fourth and best-remembered USAir merger came in 1987 with Piedmont Airlines. Today, it is often cited as an example of an extreme case of corporate culture clash. As Jerry Orr, director of Charlotte Douglas International Airport, once said: "When you buy somebody, you ought to save the good parts and throw away the bad parts, but USAir did the opposite." Orr added: "They thought the sun rose and set in Pittsburgh."